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The cybersecurity firm projects revenues between $1.445 billion and $1.505 billion. The Zacks Consensus Estimate for the same is pegged at $1.48 billion, suggesting year-over-year growth of 10.69%.
The company forecasts third-quarter non-GAAP earnings in the range of 56-58 cents per share. The consensus mark for earnings is pegged at 51 cents per share, implying a rise of 24.39% from the year-ago figure of 41 cents.
Image Source: Zacks Investment Research
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Earnings Surprise History
In the last reported quarter, the company delivered an earnings surprise of 39.02%. The company’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 20.4%.
Our proven model predicts an earnings beat for Fortinet this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Fortinet is expected to report robust third-quarter results, driven by the increasing adoption of its security and networking products in the evolving digital landscape. The company's performance is likely to have reflected the ongoing shift to hybrid work environments and the accelerated deployment of digital technologies across industries.
Fortinet completed the acquisition of Lacework, a cloud security and cloud-native application protection platform trailblazer, effective Aug. 1, 2024. The company also acquired Next DLP, which will improve its position in the standalone enterprise data loss prevention (DLP) market and strengthen its leadership in integrated DLP markets.
In the Product segment, Fortinet's FortiGate-based secure Software-Defined Wide Area Network (SD-WAN) offerings are anticipated to be a key growth driver. Our model projects a year-over-year increase of 2.8% in Product revenues, with estimates at $478.8 million for the to-be-reported quarter.
The Services segment is expected to have shown strong growth, fueled by increased demand for FortiGuard security subscriptions and FortiCare technical support services. In the third quarter, Fortinet announced updates to its OT security platform, which already stands as the industry’s most comprehensive. It provides customers with enhanced secure networking and security operations capabilities.
The company also provided updates to its secure access service edge solution, introducing new sovereign SASE options and the integration of generative artificial intelligence capabilities to provide improved flexibility in managing hybrid networks.
Our model forecasts Services revenues to reach $982 million, indicating a 13% year-over-year increase.
The global cybersecurity market continues to expand rapidly, providing a favorable backdrop for Fortinet's growth. According to a Global Market Insights report, the SD-WAN solutions market, valued at $7.2 billion in 2023, is projected to witness a compound annual growth rate of more than 27% from 2024 to 2032. This growth is attributed to the rising frequency and sophistication of cyberattacks, coupled with increasing IT expenditures. Worldwide IT spending is expected to reach $5.1 trillion in 2024, suggesting an increase of 8% year over year, which could further boost Fortinet's performance.
FTNT's FortiTrust, a unified solution with a single user-based licensing model for flexible consumption across networks, endpoints and clouds, has been gaining traction. This is expected to have driven the company's private and public cloud billings.
For the third quarter, Fortinet has provided guidance for Billings in the range of $1.53-$1.6 billion. Our model estimates Billings to reach $1.57 billion, indicating 5.3% year-over-year growth.
Fortinet operates in a fiercely competitive cybersecurity market, contending with industry giants like Palo Alto Networks (PANW - Free Report) , Check Point Software Technologies (CHKP - Free Report) and Cisco Systems (CSCO - Free Report) .
Price Performance & Valuation
Shares of Fortinet have gained 34.7% year to date and outperformed the Zacks Computer and Technology sector’s return of 23.5%. This decline has left investors questioning whether to maintain their positions or consider buying new shares.
Year-to-Date Performance
Image Source: Zacks Investment Research
Valuation-wise, Fortinet's premium pricing is evident. Its trailing 12-month price-to-sales (P/S) ratio of 9.36X is way ahead of the Zacks Internet Software industry average of 2.64X. This elevated valuation suggests high growth expectations from investors but also implies increased risk.
FTNT’s P/S TTM Ratio Depicts Stretched Valuation
Image Source: Zacks Investment Research
Investment Considerations: Balancing Risk and Reward
Fortinet faces significant challenges stemming from macroeconomic uncertainties and intensifying competition in the cybersecurity sector. Despite these headwinds, FTNT maintains a strong market position with its integrated security fabric approach, resonating well with enterprise customers. The company's focus on innovation and R&D investment positions it favorably to capitalize on emerging trends like SASE and ZTNA. With the global cybersecurity market projected to reach $308.8 billion by 2024, growing at a 10% annual rate, Fortinet is well-positioned to benefit from this expansion. The company's Security Fabric, an integrated and automated platform, provides comprehensive protection across various digital environments. Fortinet's commitment to innovation, evident in its AI-powered solutions and GenAI assistant, further strengthens its competitive edge in the rapidly evolving cybersecurity landscape.
Final Thought
The ongoing digital transformation across industries continues to drive demand for comprehensive cybersecurity solutions. Fortinet's strategic positioning, innovative approach and commitment to industry development make it a compelling investment opportunity ahead of the third-quarter earnings results despite its recent price appreciation. As organizations worldwide prioritize their digital defenses against increasingly sophisticated cyber threats, Fortinet appears well-positioned to capitalize on this growing market demand and deliver continued value to investors.
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Should Investors Buy or Hold Fortinet Stock Ahead of Q3 Earnings?
Fortinet (FTNT - Free Report) is scheduled to report third-quarter 2024 results on Nov. 7, after market close.
The cybersecurity firm projects revenues between $1.445 billion and $1.505 billion. The Zacks Consensus Estimate for the same is pegged at $1.48 billion, suggesting year-over-year growth of 10.69%.
The company forecasts third-quarter non-GAAP earnings in the range of 56-58 cents per share. The consensus mark for earnings is pegged at 51 cents per share, implying a rise of 24.39% from the year-ago figure of 41 cents.
Image Source: Zacks Investment Research
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Earnings Surprise History
In the last reported quarter, the company delivered an earnings surprise of 39.02%. The company’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 20.4%.
Fortinet, Inc. Price and EPS Surprise
Fortinet, Inc. price-eps-surprise | Fortinet, Inc. Quote
Earnings Whispers
Our proven model predicts an earnings beat for Fortinet this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
FTNT has an Earnings ESP of +1.25% and a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Factors Shaping Upcoming Results
Fortinet is expected to report robust third-quarter results, driven by the increasing adoption of its security and networking products in the evolving digital landscape. The company's performance is likely to have reflected the ongoing shift to hybrid work environments and the accelerated deployment of digital technologies across industries.
Fortinet completed the acquisition of Lacework, a cloud security and cloud-native application protection platform trailblazer, effective Aug. 1, 2024. The company also acquired Next DLP, which will improve its position in the standalone enterprise data loss prevention (DLP) market and strengthen its leadership in integrated DLP markets.
In the Product segment, Fortinet's FortiGate-based secure Software-Defined Wide Area Network (SD-WAN) offerings are anticipated to be a key growth driver. Our model projects a year-over-year increase of 2.8% in Product revenues, with estimates at $478.8 million for the to-be-reported quarter.
The Services segment is expected to have shown strong growth, fueled by increased demand for FortiGuard security subscriptions and FortiCare technical support services. In the third quarter, Fortinet announced updates to its OT security platform, which already stands as the industry’s most comprehensive. It provides customers with enhanced secure networking and security operations capabilities.
The company also provided updates to its secure access service edge solution, introducing new sovereign SASE options and the integration of generative artificial intelligence capabilities to provide improved flexibility in managing hybrid networks.
Our model forecasts Services revenues to reach $982 million, indicating a 13% year-over-year increase.
The global cybersecurity market continues to expand rapidly, providing a favorable backdrop for Fortinet's growth. According to a Global Market Insights report, the SD-WAN solutions market, valued at $7.2 billion in 2023, is projected to witness a compound annual growth rate of more than 27% from 2024 to 2032. This growth is attributed to the rising frequency and sophistication of cyberattacks, coupled with increasing IT expenditures. Worldwide IT spending is expected to reach $5.1 trillion in 2024, suggesting an increase of 8% year over year, which could further boost Fortinet's performance.
FTNT's FortiTrust, a unified solution with a single user-based licensing model for flexible consumption across networks, endpoints and clouds, has been gaining traction. This is expected to have driven the company's private and public cloud billings.
For the third quarter, Fortinet has provided guidance for Billings in the range of $1.53-$1.6 billion. Our model estimates Billings to reach $1.57 billion, indicating 5.3% year-over-year growth.
Fortinet operates in a fiercely competitive cybersecurity market, contending with industry giants like Palo Alto Networks (PANW - Free Report) , Check Point Software Technologies (CHKP - Free Report) and Cisco Systems (CSCO - Free Report) .
Price Performance & Valuation
Shares of Fortinet have gained 34.7% year to date and outperformed the Zacks Computer and Technology sector’s return of 23.5%. This decline has left investors questioning whether to maintain their positions or consider buying new shares.
Year-to-Date Performance
Image Source: Zacks Investment Research
Valuation-wise, Fortinet's premium pricing is evident. Its trailing 12-month price-to-sales (P/S) ratio of 9.36X is way ahead of the Zacks Internet Software industry average of 2.64X. This elevated valuation suggests high growth expectations from investors but also implies increased risk.
FTNT’s P/S TTM Ratio Depicts Stretched Valuation
Image Source: Zacks Investment Research
Investment Considerations: Balancing Risk and Reward
Fortinet faces significant challenges stemming from macroeconomic uncertainties and intensifying competition in the cybersecurity sector. Despite these headwinds, FTNT maintains a strong market position with its integrated security fabric approach, resonating well with enterprise customers. The company's focus on innovation and R&D investment positions it favorably to capitalize on emerging trends like SASE and ZTNA. With the global cybersecurity market projected to reach $308.8 billion by 2024, growing at a 10% annual rate, Fortinet is well-positioned to benefit from this expansion. The company's Security Fabric, an integrated and automated platform, provides comprehensive protection across various digital environments. Fortinet's commitment to innovation, evident in its AI-powered solutions and GenAI assistant, further strengthens its competitive edge in the rapidly evolving cybersecurity landscape.
Final Thought
The ongoing digital transformation across industries continues to drive demand for comprehensive cybersecurity solutions. Fortinet's strategic positioning, innovative approach and commitment to industry development make it a compelling investment opportunity ahead of the third-quarter earnings results despite its recent price appreciation. As organizations worldwide prioritize their digital defenses against increasingly sophisticated cyber threats, Fortinet appears well-positioned to capitalize on this growing market demand and deliver continued value to investors.